Wednesday, July 22, 2009

Adding a Trade Name (DBA) vs. Amending your Corporation Name

Corporations often start a business with one particular activity in mind but as things evolve and change, they want to be able to do business under a different name. Sometimes corporations want to change their legal name while others want to simply do business under a different name without incorporating a new business.

There are a couple options you can evaluate for these type of situations: trade name registration or “a doing business as” (also known as a “DBA”) filing, which will allow your corporation to use a different name, or a name amendment, which would legally change the name of your corporation.

Businesses are allowed to use names other than their legal names to conduct business. There are many terms for doing this, including DBA, which stands for doing business as, fictitious business name, assumed business name, or trade name. If a business uses another name, it must comply with provincial specific name requirements. Check out this video on business names for more info.

Trade name requirements can vary by jurisdiction. Typically, a filing must be made at the provincial level to register the name your business plans to use, and a filing fee paid. All provinces have their own name requirements for trade names. We recommend that you check with your provincial companies office for such requirements.

Once you have registered your trade name, your corporation can begin using that name in addition to its legal name. You may need to advise your bank of this new trade name if you intend on receiving checks under this new trade name. Typically, a copy of the registration will be sufficient. This allows you to have separation within your business, without the formation of a subsidiary. However, if you are considering establishing a subsidiary for other reasons, it is best to seek the advice of a lawyer or accountant.

Another option would be to change the legal name of your corporation. One thing you should consider when doing this is the business purpose on record with the jurisdiction for your corporation. If your articles of incorporation limit the activities of your corporation, amending your name may cause the corporation to extend past its current business purpose. If the business purpose listed in your articles of incorporation is a general clause, such as “all lawful business,” or “no restrictions” then changing your name would still be covered by your business purpose. Where this is an issue, amendments to the business purpose can be done simultaneously to the business name amendment. All incorporations effected through have no such limitations.

To effect a corporate name amendment to the Articles of Incorporation, the proposed amendment must be authorized by a resolution adopted by the board of directors. The resolution must then be ratified by the shareholders present at a special general meeting, in such percentage as required by the applicable law, at which time the shareholders also authorize one director to sign the Articles of Amendment. Typically, an amendment to the Articles of Incorporation must be confirmed by a greater majority (2/3 or 3/4 depending on the jurisdiction) of the votes cast by the shareholders at a special general meeting.

Moreover, a Name Search Report (for jurisdictions that accept only accept a NUANS report, it must be less than 90 days old) or an actual pre-approval (for jurisdictions like B.C., Manitoba, and Nova Scotia not older than 60 days).

Once this is done, the Articles of Amendment are filed with the relevant jurisdiction office, together with the prescribed government fee and name search report.

The government fees related to filing articles of amendment are as follows:

Jurisdiction Fee

Federal $200
Alberta $150
British Columbia $225
Manitoba $135
NFLD & Labrador $100
New Brunswick $110
Nova Scotia $150
Ontario $150
P.E.I. $260
Quebec $140
Saskatchewan $120

Following the processing of the Articles of Amendment by the government office, A Certificate of Amendment is issued confirming the change of the legal name of the corporation. The change of corporate name becomes effective from the date appearing on the Certificate, does not affect the corporation's rights or obligations.

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